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Operating Budget Data PAYGO Capital Budget Data

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Operating Budget Data PAYGO Capital Budget Data Powered By Docstoc
					                                                       J00H01
                               Maryland Transit Administration
                                  Maryland Department of Transportation


Operating Budget Data
                                                 ($ in Thousands)


                                     FY 07         FY 08           FY 09      FY 08-09     % Change
                                     Actual       Working        Allowance     Change      Prior Year

    Special Fund                      $453,839        $459,517     $535,762      $76,245       16.6%
    Federal Fund                        52,077          53,352       56,094        2,742        5.1%
    Total Funds                       $505,916        $512,869     $591,856      $78,987       15.4%



•        The Maryland Transit Administration (MTA) has fiscal 2008 deficiencies totaling a net of
         $22.3 million for Mobility paratransit, union contract increases, Commuter Bus fuel expenses,
         and additional Maryland Rail Commuter (MARC) commuter trips.

•        The fiscal 2009 allowance increases approximately $79.0 million, or 15.4%, with increases for
         the fiscal 2008 deficiencies being carried into fiscal 2009; ongoing contract increases for MARC,
         Commuter Bus, and Mobility paratransit; and additional service as a result of the revenue
         increase. However, when adjusting for health insurance, the fiscal 2009 allowance increases
         $76.4 million, or 15.0%.

•        The fiscal 2009 allowance includes approximately $31.9 million in new spending for light rail,
         bus, and Commuter Bus service additions and grants for locally operated transit services among
         other items.


 PAYGO Capital Budget Data
                                                 ($ in Thousands)

                               Fiscal 2007                  Fiscal 2008                       Fiscal 2009
                                 Actual           Legislative        Working                  Allowance
 Special                         $80,699              $131,209         $79,847                 $206,254
 Federal                         $70,963              $176,847         $87,979                 $144,579
 Total                          $151,662              $308,056        $167,826                 $350,833


Note: Numbers may not sum to total due to rounding.
For further information contact: Jonathan D. Martin                                            Phone: (410) 946-5530

                         Analysis of the FY 2009 Maryland Executive Budget, 2008
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                                J00H01 – MDOT – Maryland Transit Administration

•         The fiscal 2008 PAYGO working appropriation decreases $140 million compared to the
          fiscal 2008 legislative appropriation. The decrease is due to cash flow changes in a number of
          projects with the working appropriation more accurately reflecting actual capital spending in fiscal
          2008.

•         The fiscal 2009 allowance increases $183 million compared to the fiscal 2008 working
          appropriation. The increase is associated with new spending from the revenue increase,
          $97 million, and cash flow carry over from fiscal 2007 and 2008.


    Operating and PAYGO Personnel Data
                                               FY 07            FY 08            FY 09          FY 08-09
                                               Actual          Working         Allowance         Change

    Regular Operating Budget Positions           2,900.50          2,950.50        3,061.50           111.00
    Regular PAYGO Budget Positions                 109.00            112.00          138.00            26.00
    Total Regular Positions                      3,009.50          3,062.50        3,199.50           137.00

    Operating Budget Contractual FTEs               30.00             31.00           19.00           -12.00
    PAYGO Budget Contractual FTEs                       3.00           2.00            0.00            -2.00
    Total FTEs                                      33.00             33.00           19.00           -14.00

    Total Personnel                              3,042.50          3,095.50        3,218.50           123.00

    Vacancy Data: Regular Positions

    Turnover, Excluding New Positions                                144.94          4.53%
    Positions Vacant as of 12/31/07                                   98.00          3.20%

•         The fiscal 2009 allowance provides for a net increase of 137 regular positions. MTA had 24
          positions abolished by the Board of Public Works as part of the General Assembly’s direction
          for 500 vacant positions to be abolished, and 1 position was transferred to the Secretary’s
          Office. MTA added 162 positions in the allowance to assist in providing additional service in
          a number of transit functions.

•         MTA added 132 new operating budget positions to support a number of new operating budget
          initiatives. In addition, 30 positions are added to the capital program to support and manage
          the expanded capital program.

•         Fourteen long-term contractual full-time equivalents are converted to regular positions as a
          result of the revenue increase.

•         The fiscal 2009 allowance has turnover expectancy budgeted at 4.53%, or 145 positions. As
          of January 2008, the vacancy rate was 98 positions, or 3.20%.

                        Analysis of the FY 2009 Maryland Executive Budget, 2008
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                            J00H01 – MDOT – Maryland Transit Administration


Analysis in Brief
Major Trends
Ridership Is Increasing: Total ridership increased from fiscal 2006 to 2007 and is expected to
continue increasing through fiscal 2008 and 2009. This increase in ridership is largely driven by
increases in light rail and contracted transit services like Commuter Bus and MARC. Core bus
service is expected to experience relatively modest ridership increases in fiscal 2008 and 2009. The
Department of Legislative Services (DLS) recommends that MTA discuss with the committees
what impact proposed service enhancements will have on ridership and to what extent
ridership growth factored into service enhancement decisions.

Peer Efficiency Comparison: When comparing MTA to other comparable transit systems for
fiscal 2006, MTA ranked favorably for operating expenses per revenue vehicle mile. However, when
looking at measures based upon passenger trips or ridership, MTA did not compare as favorably to
peer transit systems. DLS recommends that MTA discuss its unfavorable comparison to peer
transit systems when considering ridership as a factor.

On-time Performance: On-time performance for transit services is not expected to change
dramatically in fiscal 2008 or 2009. Core bus service appears to have a declining trend for on-time
performance. DLS recommends that MTA discuss how to improve MARC and core bus on-time
performance and what effect new service may or may not have on the on-time performance
measure.


Issues
Farebox Recovery Legislation: Legislation has been introduced that would eliminate the statutory
farebox recovery requirement and instead move to annual performance benchmarks. DLS
recommends that MTA discuss with the committees the current status of the farebox recovery
requirement and the need for new performance standards.

Four Major Transit Projects All Competing for Funding: The 2008-2013 Consolidated
Transportation Program includes funding for four major transit lines that account for a significant
portion of transit capital funding by fiscal 2013. Construction of each line is dependent on federal aid
which is limited and highly competitive. DLS recommends that MTA discuss the prospect of all
four projects receiving federal aid and the practical benefit of committing a large portion of the
future capital program to projects that may not be completed.

MARC Growth and Investment Plan: MTA released the MARC Growth and Investment Plan in
September 2007. The plan represents a long-range plan of how to enhance and grow the MARC
system at a cost of $3.9 billion over 27 years. DLS recommends that MTA discuss with the
committees the MARC Growth and Investment Plan and the priority of the plan relative to
other proposed transit lines, the financing of such a plan, and the willingness of CSX and
Amtrak to work with MTA to implement the plan.


                     Analysis of the FY 2009 Maryland Executive Budget, 2008
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                          J00H01 – MDOT – Maryland Transit Administration

Operating Budget Recommended Actions

                                                                                Funds

1.    Add budget bill language requiring the transit benefit for State
      employees be budgeted in each agency's budget in fiscal 2010.

2.    Add budget bill language requiring notification of service
      expansions or enhancements.

3.    Reduce funds for additional vehicle and facility cleaning             $ 1,000,000
      contracts.

4.    Adopt committee narrative regarding the Maryland Transit
      Administration’s union pension and Other Post Employment
      Benefits.

5.    Add budget bill language to eliminate funding and positions for
      increase in Baltimore core bus services.

6.    Add budget bill language requiring a report on the new
      paratransit contract.

7.    Add budget bill language eliminating the expansion of light rail
      service.

8.    Add budget bill language requiring a report on the third party
      contract for Maryland Rail Commuter services.

9.    Reduce funds for Commuter Bus service increase.                        1,251,525

10.   Add budget bill language to reduce funds for locally operated
      transit system grants.

      Total Reductions                                                      $ 2,251,525




                   Analysis of the FY 2009 Maryland Executive Budget, 2008
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                           J00H01 – MDOT – Maryland Transit Administration

PAYGO Budget Recommended Actions

                                                                                  Funds

 1.   Reduce special funds in the capital program to more accurately         $ 50,000,000
      reflect cash flow needs.

      Total Reductions                                                       $ 50,000,000




Updates
Paratransit Cost Benefit Analysis: Fiscal 2008 budget bill language restricted funds contingent upon
a cost benefit analysis of paratransit service delivery models being completed. That report was
submitted, and a summary is provided.




                    Analysis of the FY 2009 Maryland Executive Budget, 2008
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      J00H01 – MDOT – Maryland Transit Administration




Analysis of the FY 2009 Maryland Executive Budget, 2008
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                                            J00H01
                         Maryland Transit Administration
                           Maryland Department of Transportation

Budget Analysis
Program Description
       The Maryland Department of Transportation (MDOT) supports transit in Maryland through
the Maryland Transit Administration (MTA). MTA consists of the following operating budget
programs:

•     Transit Administration provides executive direction and support services for MTA.

•     Bus Operations manages bus services in Baltimore City and surrounding counties. These
      services include the operation of fixed route and paratransit lines and contracts with commuter
      and paratransit service providers.

•     Rail Operations includes the Baltimore Metro heavy rail line and the Baltimore area light rail
      lines as well as the management of the Maryland Rail Commuter (MARC) contracts with
      Amtrak and CSX Transportation.

•     Statewide Operations provides technical assistance and operating grants to local
      jurisdictions’ transit services, including Montgomery County’s “Ride-On” and Prince
      George’s County’s “the Bus” services. Additionally, the program contracts with private
      carriers to operate Commuter Bus services throughout the State. Assistance is also provided
      to several short-line freight railroads to support the maintenance of State-owned rail lines.

      MTA has identified the following goals:

•     to provide outstanding service;

•     to encourage transit ridership in Maryland;

•     to use MTA resources efficiently and effectively and be accountable to the public, customers,
      and employees, with performance measured against prior years and transit industry peers; and

•     to provide a safe, crime free environment for customers and employees.




                   Analysis of the FY 2009 Maryland Executive Budget, 2008
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                               J00H01 – MDOT – Maryland Transit Administration

Performance Analysis: Managing for Results
        As part of its allowance, MTA submits a number of performance measures including detail on
the farebox recovery ratio, on-time performance, and other operating measures including operating
cost per passenger.

        Boardings
        Exhibit 1 provides detail on the number of boardings for services provided by MTA. Overall,
MTA ridership grew rather significantly from fiscal 2006 to 2007. MTA attributes the growth from
fiscal 2006 to 2007, the largest percentage growth rate since fiscal 1995, to rising gas prices, stable
fares, and the completion of the light rail double tracking project. Ridership growth is expected to
continue in fiscal 2008 and 2009. Contracted transit services like MARC and Commuter Bus, on a
percentage basis, are expected to experience rapid growth in fiscal 2008 and 2009 largely based upon
strong employment growth in the Washington, DC region. Baltimore core bus service has seen
relatively flat ridership; this is not unexpected given that the Maryland Department of Planning
estimates Baltimore City population growth to be 0.3% from 2005 to 2010. The Department of
Legislative Services (DLS) recommends that MTA discuss with the committees what impact
proposed service enhancements may or may not have on increasing ridership and to what
extent ridership growth factored into service enhancement decisions.


                                                   Exhibit 1
                         Maryland Transit Administration Boardings
                                                Fiscal 2004-2009
                                                 (in Thousands)

                                      2004        2005       2006        2007      2008        2009
                                     Actual      Actual     Actual      Actual   Estimated   Estimated
 Bus                                  63,793      63,241       63,526   64,272     64,433      64,594
 Metro                                12,426      12,863       12,919   13,226     13,327      13,394
 Light Rail                            5,818       4,875        5,401    7,122      7,835       8,548
 Paratransit                             542         550          653      728        856         941
 Taxi Access                              n/a        170          312      367        433         484
 MARC                                  6,727       6,884        7,275    7,505      7,618       7,694
 Contracted Commuter Bus               2,703       2,954        3,193    3,366      3,521       3,526
 Total                                92,009      91,537       93,279   96,586     98,022      99,181
 Annual Percent Change                             -0.5%        1.9%     3.5%       1.5%        1.2%


Source: Maryland Transit Administration




                       Analysis of the FY 2009 Maryland Executive Budget, 2008
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                                J00H01 – MDOT – Maryland Transit Administration

Peer Performance
        Each year MTA is required by statute to submit a report that compares MTA to other similar
transit systems nationwide. Exhibit 2 compares MTA to other systems for operating expenses per
revenue vehicle mile and passenger trip and passenger trips per revenue vehicle mile for fiscal 2006.
As the exhibit shows, MTA had the second lowest operating expense per revenue mile of the peer
systems shown. This is an improvement compared to last year when MTA had the second highest
cost per revenue mile. Of note is that MTA was the only agency to experience a decrease in
operating expense per revenue vehicle mile which indicates that expenditures increased but that
revenue vehicle miles increased at a greater rate than expenditures. MTA did have the highest
operating expense per passenger trip, similar to last year. Finally, MTA had the fewest number of
passenger trips per revenue vehicle mile and had an actual decline from the prior year due to revenue
vehicle miles increasing more rapidly than passenger trips. This is reflected in the general trend for
ridership, which has been relatively flat through fiscal 2006. DLS recommends that MTA discuss
with the committees why it does not compare favorably to peer transit systems when ridership
and boardings are considered and what can be done to improve this.


                                                    Exhibit 2
               Performance Indicators for MTA and Peer Transit Systems
                                                   Fiscal 2006

                      Operating Expenses Per           Operating Expenses Per     Passenger Trips Per
                       Revenue Vehicle Mile               Passenger Trip          Revenue Vehicle Mile

Baltimore                       $9.58                                $4.00                2.4
Boston                          10.57                                 2.48                4.3
Cleveland                        8.37                                 3.17                2.6
Los Angeles                      9.84                                 2.18                4.5
Philadelphia                    10.38                                 2.68                3.9
Washington, DC                  10.17                                 2.85                3.6

Source: Maryland Transit Administration; National Transit Database



        On-time Performance
        MTA aims to provide high on-time performance for all of its service. Exhibit 3 provides data
on the percentage of service provided on-time for bus, Metro, light rail, and MARC. Rail service has
typically performed well in this area, while bus service has not achieved strong results. For example,
Metro had a 93% and 95% on-time performance rating in fiscal 2006 and 2007, respectively and is
estimated to maintain the 95% level in fiscal 2008 and 2009.                          Light rail has




                       Analysis of the FY 2009 Maryland Executive Budget, 2008
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                               J00H01 – MDOT – Maryland Transit Administration



                                                 Exhibit 3
                                  Percentage of Trips Not On-time
                                             Fiscal 2004-2009


    45%
    40%
    35%
    30%
    25%
    20%
    15%
    10%
      5%
      0%
                2004            2005           2006              2007         2008        2009
                Actual          Actual         Actual            Actual     Estimated   Estimated

                   Bus             Metro            Light Rail            MARC          Mobility



MARC: Maryland Rail Commuter

Source: Maryland Transit Administration


consistently maintained an on-time performance level of 99%. MARC services have remained in the
89% range, and this level is not expected to increase in fiscal 2008 and 2009 largely due to Amtrak
increasing intercity service and increased freight traffic which reduces track time for MARC. DLS
recommends that MTA discuss with the committees what can be done to improve MARC
on-time service and what impact additional trips will have on on-time performance.

        Bus service on-time performance was at 79% in fiscal 2005; however, the level of
performance has been declining since then, and was at 71% in fiscal 2007. Only moderate increases
are estimated in fiscal 2008 and 2009. Bus service on-time performance is more difficult than rail to
maintain due to traffic conditions. Even with that caveat, a trend has developed regarding on-time
performance that may be contributing to a lack of growth in bus ridership. DLS recommends that
MTA discuss with the committees what can be done to improve the on-time performance of
core bus service and MARC.




                         Analysis of the FY 2009 Maryland Executive Budget, 2008
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                            J00H01 – MDOT – Maryland Transit Administration

Fiscal 2008 Actions

       Proposed Deficiency
       MTA has proposed six special fund deficiencies for fiscal 2008 totaling a net of $22.3 million.
The deficiencies are for the following:

•      $8.2 million net increase for the Mobility paratransit program due to increased ridership and
       the relocation of its reservation operations;

•      $6.0 million for union contract increases negotiated each fall;

•      $3.9 million to provide funds for the Commuter Bus program due to increased demand and
       higher fuel prices;

•      $2.6 million net increase to provide funds for the CSX MARC contract, which includes three
       additional evening trips on the Penn Line and increased maintenance of MARC passenger
       cars;

•      $1.1 million net increase to provide funds for core bus service in Baltimore due to additional
       security maintenance and increasing fuel costs; and

•      $0.4 million net increase to support increased contract obligations and other miscellaneous
       operating costs.


Governor’s Proposed Budget
        In total, the fiscal 2009 allowance increases approximately $79 million, or 15.4%, from the
fiscal 2008 working appropriation.        When adjusting for health insurance, the increase is
$76.4 million, or 15.0%, with the magnitude of the adjustment for health insurance not as great as in
other agencies due to the union positions’ health insurance being properly accounted for each fiscal
year. Exhibit 4 provides a summary of the major changes in the MTA allowance from the
fiscal 2008 working appropriation to the fiscal 2009 allowance.




                    Analysis of the FY 2009 Maryland Executive Budget, 2008
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                                   J00H01 – MDOT – Maryland Transit Administration



                                                                 Exhibit 4
                                           Governor’s Proposed Budget
                                   MDOT – Maryland Transit Administration
                                            ($ in Thousands)
                                                                Special                  Federal
How Much It Grows:                                               Fund                      Fund                      Total
2008 Working Appropriation                                   $459,517                    $53,352               $512,869
2009 Governor’s Allowance                                      535,762                     56,094                591,856
    Amount Change                                              $76,245                     $2,742                $78,987
    Percent Change                                                16.6%                       5.1%                  15.4%

Where It Goes:
   Personnel Expenses
       New positions...................................................................................................................       $5,973
       Abolished/transferred positions .......................................................................................                  -946
       Increments and other compensation.................................................................................                       401
       Health insurance – pay-as-you-go costs...........................................................................                        426
       Health insurance – reduce long-term Other Post Employment Benefits liability ............                                               1,792
       Health insurance union ....................................................................................................             2,627
       Union retirement contribution..........................................................................................                 3,372
       Maryland Transit Administration police retirement contribution....................................                                       -453
       Regular employee retirement ...........................................................................................                  314
       Turnover expectancy adjustments....................................................................................                     5,312
       Overtime ..........................................................................................................................    -1,000
       Other fringe benefit adjustments......................................................................................                    -47
   Administration
       Increase in printing costs for new regional smart cards...................................................                               260
       Increase in maintenance and cleaning of vehicles as a result of revenue increase to be
       allocated across programs ................................................................................................              1,000
       Increase in consulting studies to assist in the expansion of core bus service...................                                        1,000
       Increase in software maintenance for bus scheduling and interactive voice response
       network ............................................................................................................................     984
       Increase in the rebid of insurance claims adjuster contract..............................................                                750
       Increase in insurance coverage rates paid to State Treasurer...........................................                                  621
   Bus Programs
       Increase in maintenance and repair costs for busses due to contract scope increase for
       voice annunciator and video surveillance systems...........................................................                             1,638

                       Analysis of the FY 2009 Maryland Executive Budget, 2008
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                                           J00H01 – MDOT – Maryland Transit Administration

  Where It Goes:
           Increase in contract costs for the Mobility paratransit service.........................................                                               14,776
           Increase in diesel fuel costs ........................................................................................................                    777
           Increase in rent payments due to Mobility paratransit service moving to new location
           with higher lease costs ................................................................................................................                  357
           Increase in tire costs due to rebid contract.................................................................................                             250
      Rail Program
           Increase in MARC contract costs from additional service associated with the revenue
           increase as well as ongoing operating contract costs................................................................                                    16,470
           Increase station master lease with CSX based upon contract ..................................................                                             746
           Increase in utility rates based upon fiscal 2008 appropriation as well as the additional cost
           for light rail and MARC service.................................................................................................                          754
           Increase in rail maintenance costs due to additional service and the need for additional
           parts ..............................................................................................................................................      519
           Increase in contract maintenance costs for light rail based upon audit as well as increased
           maintenance on MARC rail cars................................................................................................                             909
      Statewide
           Increase in Commuter Bus service contracts as a result of additional trips ............................                                                  5,748
           Increase in grants for locally operated transit systems as a result of the revenue increase ....                                                        14,100
           Other.............................................................................................................................................        -443
      Total                                                                                                                                                       $78,987


  Note: Numbers may not sum to total due to rounding.



       Exhibit 5 shows the changes in the budget from deficiencies, normal operating budget
growth, and service enhancements. As shown, normal operating budget growth increases a total of
$47.0 million, and spending as a result of the revenue increase totals $31.9 million. Following is a
summary of the major changes by personnel and the type of transit service provided, with the
additional service from the revenue increase highlighted.




                             Analysis of the FY 2009 Maryland Executive Budget, 2008
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                             J00H01 – MDOT – Maryland Transit Administration



                                                Exhibit 5
        Changes as a Result of Revenue Increase and Normal Budget Growth
                                          Fiscal 2008 and 2009
                                             ($ in Millions)

                                                                New
                                                              Positions    2008        2009   Total

Operating Increases
Maryland Rail Commuter (MARC) contract increases for
station lease and revenue surcharge                                            $1.4   $12.5   $13.9
Mobility Taxi – increased ridership and a new contract for
service                                                                         7.8     7.4    15.2
Union – pension plan payments and health benefits not fully
accounted for in fiscal 2008                                                    6.0     0.0     6.0
Department of Budget and Management Increases –
increments, heath insurance, etc.                                               0.0     3.4     3.4
Core Bus – bus maintenance contracts and schedule changes                       2.2     0.0     2.2
Farebox collection maintenance and ticket stock                                 0.0     1.3     1.3
Light Rail Environmental Protection Agency compliance and
increased maintenance per audit                                                 0.0     1.0     1.0
Commuter Bus – annualization of fiscal 2007 trips and
contract costs                                                                  1.7     0.5     2.2
Diesel fuel – commuter bus fuel increases                                       1.5     0.0     1.5
Information technology enhancements                                             0.0     0.8     0.8
Other                                                                           1.0     0.2     1.2
Cost containment                                                               -1.7     0.0    -1.7
Subtotal                                                                  $19.9       $27.1   $47.0

Revenue Increase
Commuter Bus – 15 additional spring trips, 5% increase in
Washington Commuter Service, and four new positions                4           $1.2    $3.0    $4.2
Additional grants to locally operated transit systems                           0.2    13.9    14.1
Core Bus – 4.5% increase in core bus service for Baltimore
City                                                             71             0.0     4.5     4.5
Maryland Transit Administration Police – new positions with
uniforms and protective equipments                               12             0.0     1.0     1.0
Light Rail – new positions and additional weekend trips            9            0.0     1.3     1.3




                    Analysis of the FY 2009 Maryland Executive Budget, 2008
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                                 J00H01 – MDOT – Maryland Transit Administration


                                                                    New
                                                                  Positions    2008        2009   Total

    Conversion of long-time contractual positions                     14            0.0     0.2      .2
    Additional bus supervisors                                        10            0.0     0.6      .6
    Improve maintenance of bus and customer facilities                 6            0.0     2.3     2.3
    MARC service expansion and positions                               6           $1.0     2.4     3.9
    Other                                                                                   0.3     0.3
    Subtotal                                                                       $2.4   $29.5   $31.9

    Total                                                            132      $22.3       $56.6   $78.9


Source: Maryland Transit Administration



            Personnel
      Exhibit 6 shows the position changes in the fiscal 2009 allowance which result in a net of 137
new positions. In total, personnel costs increase $17.8 million in fiscal 2009 compared to the
working appropriation. The major increases are for the following purposes:

•           $6.0 million increase for 132 new operating positions for a variety of service enhancements;

•           $5.3 million increase for turnover expectancy due to the agency expecting a low turnover rate;

•           $3.4 million increase for union pension costs;

•           $2.6 million for union health insurance costs;

•           $1.8 million increase to fund regular employees Other Post Employment Benefits long-term
            liability;

•           $1.0 decrease in overtime due to cost containment; and

•           $946,000 decrease for the 24 abolished positions as part of the Board of Public Works (BPW)
            action to eliminate 500 vacant positions as directed by the General Assembly.




                         Analysis of the FY 2009 Maryland Executive Budget, 2008
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                                J00H01 – MDOT – Maryland Transit Administration



                                                  Exhibit 6
                                     Fiscal 2009 Position Changes

   Positions Removed
   Positions abolished as a result of Board of Public Works action to abolish long-term vacant
     positions                                                                                     -24
   One position transferred to the Secretary’s Office                                               -1
   Subtotal Positions Removed                                                                      -25

   Positions Added
   Commuter Bus positions for maintenance and oversight                                             4
   Core Bus service expansion requires additional bus operators                                    71
   Maryland Transit Administration police officers to provide additional security and safety to
    passengers                                                                                     12
   Light Rail expansion requires additional operators                                               9
   Converting long-term contractual positions to regular positions                                 14
   Additional bus supervisors to better respond to incidents                                       10
   Improve maintenance of bus and customer facilities                                               6
   Maryland Rail Commuter service requires additional managers and maintenance workers              6
   Subtotal Operating Positions Added                                                             132

   New Capital Positions to Support Expanded Program                                               30

   Total New Positions                                                                            137


Source: Department of Legislative Services



        Core Bus Service
        The fiscal 2009 allowance provides for a 4.5% increase in the level of service for core bus
service in Baltimore City as a result of the revenue increase at a cost of $4.5 million and 71 positions.
The service is anticipated to alleviate overcrowding, reduce headways and delays on selected routes,
and improve service reliability. The additional cost is almost entirely due to additional union
personnel costs and includes 50 bus operators, 2 transportation supervisors, 11 repairmen, and 8
maintenance supervisors. In addition, 10 new bus supervisors at a cost of approximately $600,000
were added to assist in the oversight of bus operations. The additional bus supervisors will be better
equipped to respond to service issues in a quicker time frame, as well as ensure more reliable service.


                       Analysis of the FY 2009 Maryland Executive Budget, 2008
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                            J00H01 – MDOT – Maryland Transit Administration

       Paratransit Mobility
        In total, paratransit Mobility costs increase approximately $15.2 million. Of the increase,
$14.8 million is due to increased contract costs in fiscal 2008 that were carried into fiscal 2009 as
well as fiscal 2009 contract increases. Ridership continues to increase for this service and a Request
for Proposals (RFP) for a new contract is expected to be released shortly. The costs in fiscal 2009
may continue to increase based upon the outcome of the contract; conversely, costs may also be
reduced. In addition, there is $400,000 added for the reservation and scheduling functions moving
into larger office space. DLS recommends that MTA discuss with the committees the upcoming
RFP and contract for paratransit services, the anticipated cost of the service, and the actions
being taken to control the costs associated with this service.

       Light Rail and Metro
       The fiscal 2009 allowance provides for increased weekend light rail service to the
Baltimore/Washington International Thurgood Marshall Airport at a cost of $1.4 million and nine
new positions as a result of the revenue increase. The increase in service is in response to ridership
demands from weekend travelers and employees commuting to the airport on Sundays. This
additional cost includes increases for personnel and electricity to provide the additional weekend
trips.

       In addition, there is approximately $1.0 million provided in the allowance for the purchase of
replacement equipment and increased maintenance of light rail vehicles based upon an audit
performed by the American Public Transportation Association.

       Commuter Bus
       In total, Commuter Bus service is expected to increase approximately $6.4 million.
Approximately $2.8 million of the increase is associated with 15 new lines being added in fiscal 2008
as a deficiency and then annualized in fiscal 2009 for new service to Washington, DC as a result of
the revenue increase. In addition, MTA is proposing to increase Washington Commuter Bus service
by 5% to respond to ridership demand which is estimated to cost $1.2 million. To assist in managing
the contracts associated with the additional service, MTA is adding four new positions to assist in
supervising the service at a cost of $215,000.

        Other contract cost increases include a deficiency of $1.0 million for the annualization of
fiscal 2007 spring trips added. Finally, contract costs increase approximately $500,000 for ongoing
Washington Commuter Bus contracts and $725,000 for Baltimore Commuter Bus.

       MARC
       MARC contract service has a number of increases. The current MARC contract increases
$16.5 million in fiscal 2009. This increase is due to the following:



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•      $6.9 million increase in contract costs that MTA must pay to CSX as a result of CSX being
       the operator of MARC service for the State as stipulated in its contract;

•      $5.3 million increase in ongoing contract costs with Amtrak to provide MARC service;

•      $2.6 million increase for the three additional Amtrak evening trips on the Penn Line as part of
       the revenue increase;

•      $1.0 million increase in payments to CSX as a result of a revenue surcharge. This represents a
       5% surcharge on gross ticket sales done by CSX. The surcharge rate increased due to CSX
       performing this service on behalf of MTA;

•      $500,000 increase in track access fees to CSX; and

•      $200,000 increase for contract maintenance cost on MARC cars.

       As part of the revenue increase, MTA has added six new positions at a cost of $344,166.
These positions will assist in the oversight and management of MARC service as well as assisting in
the maintenance of MARC trains and positions to assist in the operational control of the new evening
trips. DLS recommends that MTA discuss with the committees the status of the third party
contract for the CSX lines, anticipated costs, and why an effort was not made earlier to identify
a third party contractor to avoid the various penalty payments associated with CSX providing
the service.

       Locally Operated Transit Systems
        As part of the revenue increase, an additional $14.1 million is being provided to locally
operated transit systems, which represents a 25% increase over the fiscal 2008 working appropriation.
The additional funds will help to support and expand locally operating transit systems. MTA
indicates that exact distribution of funds will not be known until February. Exhibit 7 provides a
summary of how those funds are expected to be distributed.

       Other Changes
       There are several other changes of note in fiscal 2009 allowance which include the following:

•      $1.3 million and six positions, as part of the revenue increase, to provide for the improved
       maintenance of bus and customer facilities;

•      $1.3 million increase for farebox collection maintenance and ticket stock as part of the effort
       to implement the regionwide SmartCard as well as software upgrades;




                    Analysis of the FY 2009 Maryland Executive Budget, 2008
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                                                 Exhibit 7
        Distribution of Additional Funds to Locally Operated Transit Systems
                                     Fiscal 2009 Estimated Allocation


                      Montgomery County                                    $5,000,000
                      Small Urban Area Operating Assistance                 2,400,000
                      Job Access Reverse Commute                            2,000,000
                      Prince George’s County Local Bus                      2,000,000
                      Statewide Special Transportation                      2,000,000
                      Rural Area Operating Assistance                         500,000
                      Corridor Transportation Corporation                     200,000
                      Total                                               $14,100,000


Source: Maryland Transit Administration



•       $1.0 million increase for 12 new police officers, uniforms, and equipment as part of the
        revenue increase; and

•       $800,000 increase for the information technology software support for bus scheduling and
        reservation software.

        Impact of Cost Containment
        MTA undertook internal cost containment actions in both fiscal 2008 and 2009 which totaled
$1.7 million. The majority of the cost savings came from a $1.0 million reduction to overtime. Other
cost containment efforts included reducing temporary employees, delaying the filling of contractual
positions, reducing the information technology budget, and several other administrative reductions.




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                              J00H01 – MDOT – Maryland Transit Administration

PAYGO Capital Program

        Program Description
        MTA’s capital program provides funds to support the design, construction, rehabilitation, and
acquisition of facilities and equipment for the bus, rail, and statewide programs. The program also
provides State and federal grants to local jurisdictions and nonprofit organizations to support the
purchase of transit vehicles and the construction of transit facilities.

        Impact of Special Session

        Transportation revenues were increased during the 2007 special session. As a result of the
additional revenues, the total transportation capital program from fiscal 2008 to 2013 increased
$2.1 billion compared to the draft 2008 to 2013 capital program. MDOT has assumed approximately
$450.0 million annually in new spending with the first $250.0 million being used for system
preservation. The remaining $200.0 million was divided equally between MTA and the State Highway
Administration. In total, MTA’s capital budget increased $865.7 million above the fiscal 2008 to 2013
draft Consolidated Transportation Program (CTP) as a result of the revenue increase.

        Exhibit 8 provides a summary of how the funds are allocated over the six-year period. The
fiscal 2009 allowance includes $97 million in spending associated with the additional funds provided.


                                                  Exhibit 8
                     Projects Added as a Result of Additional Revenues
                                              Fiscal 2008-2013
                                               ($ in Millions)
               Project                                                           Six-year Total
               Agencywide System Preservation                                         $53
               Environmental Compliance                                                39
               Over the Road Coaches for Commuter Bus                                  20
               Core Bus – Systemwide Improvements and Rehabilitation                   35
               Light Rail – Mid-Life Overhaul and System Preservation                  86
               Metro – Rail Care Overhaul and System Preservation                      75
               Freight System Preservation                                             16
               Locally Operated Transit Systems                                        63
               Maryland Rail Commuter Growth and Investment Plan                      282
               Green Line Study in Baltimore City                                       5
               Corridor Cities Transitway                                              43
               Purple Line                                                             74
               New Bus Facility – Kirk Division                                        65
               Maryland Transit Administration Additional Staff                        10
               Total                                                                 $866

Source: Maryland Department of Transportation, 2008-2013 Consolidated Transportation Program


                      Analysis of the FY 2009 Maryland Executive Budget, 2008
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        Fiscal 2008 to 2013 CTP

        The fiscal 2009 allowance for MTA totals $350.8 million, an increase of $183.0 million
compared to the fiscal 2008 working appropriation. There is $7.9 million in non-State sources,
largely in local funds being contributed to State projects. As shown in Exhibit 9, funding for major
projects totals $221.6 million, or 63%, of all funding and system preservation funding totals
$117.1 million, or 33%.


                                                  Exhibit 9
                                Summary of Fiscal 2009 Allowance
                                               ($ in Millions)


                       Development and
                                                                       Capital Salaries and
                         Evaluation                                          Wages
                            $11.7                                              $8.3




                  System
                Preservation
                   $117.1
                                                                                    Major Projects
                                                                                       $221.6




Source: Maryland Department of Transportation, 2008-2013 Consolidated Transportation Program



        Fiscal 2008 and 2009 Cash Flow Analysis

        As Exhibit 10 shows, the fiscal 2008 working appropriation decreases $140 million compared
to the legislative appropriation. This decrease is due to cash flow changes in projects and more
accurately reflects the actually expenditures for projects. The funding for these projects will need to
be reprogrammed into fiscal 2009 and beyond. Specific projects with significant cash flow changes
include the following:

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                                        J00H01 – MDOT – Maryland Transit Administration


                                                          Exhibit 10
                                                   Cash Flow Changes
                                                       Fiscal 2008-2009

                     $400
                     $350
                     $300
    $ in Millions




                     $250
                     $200
                     $150
                     $100
                      $50
                       $0
                                2007 Actual       2008 Legislative        2008 Working    2009 Allowance

                                                        Special               Federal

Source: Maryland Department of Transportation, 2008-2013 Consolidated Transportation Program



•                   $41 million for the Silver Spring Transit Center;

•                   $23 million for the Red Line in Baltimore City; and

•                   $18 million for bus procurement.

        The fiscal 2009 allowance totals $350.8 million and increases $183.0 million compared to the
fiscal 2008 working appropriation. Of this increase, $97.0 million is associated with new projects
from the revenue increase, and $86.0 million is due to cash flow carry over from fiscal 2007 and
2008. The projects added as a result of the revenue increase are noted in later exhibits.

        Cash flow changes in project schedules are not unexpected and can occur year to year.
Changes can result from weather, change in the scope of a project, or right of way acquisition;
however, MTA appears to have developed a pattern of overestimating the expenditure schedule for its
projects. Exhibit 11 highlights the cash flow changes within each fiscal year from fiscal 2004 to
2008.

        For comparison, the change from the working appropriation to the actual expenditure is the
most accurate portrayal of capital spending within a fiscal year. As shown, actual capital
expenditures have been significantly less than the working appropriation or even the legislative
appropriation. For example, in fiscal 2006, actual expenditures were $157 million less than the
working appropriation and $61 million less than the legislative appropriation. Based upon historical
cash flows, it is not clear that MTA will actually be able to spend all of the funds provided.

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                                J00H01 – MDOT – Maryland Transit Administration


                                                 Exhibit 11
                                      Historical Capital Spending
                                              Fiscal 2004-2009
                                               ($ in Millions)

  $450
  $400
  $350
  $300
  $250
  $200
  $150
  $100
    $50
     $0
            Fiscal 2004      Fiscal 2005     Fiscal 2006      Fiscal 2007   Fiscal 2008    Fiscal 2009

                             Allowance                     Working                Actual


Source: Department of Legislative Services


         The ability to manage cash flow enables the department to better manage its finances and
allocate resources in a manner that corresponds to need. By not managing cash flow and projects in a
more realistic and prudent manner, the finances of the entire department are affected. A more
realistic portrayal of capital expenditures may obviate or reduce the need for bond sales as well as
reduce the size of the fund balance being carried forward by the Transportation Trust Fund (TTF)
each fiscal year. DLS recommends that MTA discuss with the committees what steps are being
taken to better manage projects and reduce the level of cash flow carry over from year to year.
In addition, MTA should discuss its ability to spend the total amount of funding in fiscal 2009
given its past history of actual expenditures for projects. Finally, DLS recommends that there
be a $50 million reduction in the capital program to more accurately reflect historical capital
expenditures and that a corresponding reduction in the level of debt outstanding be made.

       Exhibit 12 provides a list of major CTP construction projects funded in fiscal 2009. The
following projects account for 86% of total funding in the construction program.




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                                                           Exhibit 12
              Maryland Transit Administration Major Construction Projects
                                                   Funded in Fiscal 2009
                                                     ($ in Thousands)
                                                                                                     Completion of
                                                                                                      Fiscal Year
   Project                                                                      2009       Total $    Cash Flow
   Maryland Rail Commuter (MARC) Efficiency Improvements on
   Camden, Brunswick, and Penn Lines – ongoing program of
   improvements on MARC lines                                                $6,500      $105,586        2013
   MARC Mid-life Overhaul – mid-life overhaul of 28 MARC II
   cars                                                                         4,613      36,932        2012
   MARC Locomotive Overhaul – conduct mid-life overhaul of
   electric locomotives                                                      15,679       116,314       2013
   MARC Growth and Investment Plan                                           25,850       201,325    Ongoing
   Silver Spring Transit Center and MARC Station Relocation –
   two-phase project to provide a fully integrated transit center at the
   Silver Spring Metrorail Station                                            9,948        82,526        2011
   Light Rail Vehicle Mid-life Overhaul                                      11,348        60,014        2013
   Owings Mills Joint Development – develop areas adjacent to
   transit stations                                                             4,731      29,524        2011
   Metro Railcar Overhauls – Overhaul of structural elements
   and systems of 100 Metro railcars                                            5,036     145,327        2012
   Metro Fire and Security Management Systems – replace existing
   equipment                                                                 11,537        74,596        2013
   Bus Procurement – purchase 40-foot buses to be used in an
   annual replacement program of buses in service of 12 or more
   years                                                                     28,220       259,878        2013
   Locally Operated Transit Systems Capital Procurement
   Projects (Local Jurisdictions) – MTA provides funding to
   local jurisdictions in rural and small urban areas for transit
   vehicles, equipment, and facilities                                       36,840       214,468        2013
   Mobility Vehicle Procurement – procure paratransit service
   vehicles                                                                     9,120      60,023        2013
   Replacement of Fare Collection Equipment and Implement
   SmartCard                                                                    6,675      90,139        2010
   Community Cable Television Improvements – Improvements
   will enhance safety and security at key MTA locations                        4,100      22,801        2012
   Montgomery County Local Bus Program – funding for
   annual bus replacement                                                    10,080        56,749        2013

   Total                                                                   $190,277     $1,556,202

Projects in bold indicate projects added as a result of the revenue increase.

Source: Maryland Department of Transportation, 2008-2013 Consolidated Transportation Program


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                                   J00H01 – MDOT – Maryland Transit Administration

Projects Added to the Construction Program
       The fiscal 2008 to 2013 CTP includes six projects added to the construction for a cost of
$43.9 million in fiscal 2009 as shown in Exhibit 13.


                                                        Exhibit 13
                   MTA CTP Projects Added to the Construction Program
                                                        Fiscal 2009
                                                    ($ in Thousands)

                                                                                               Completion of
                                                                                                Fiscal Year
   Project                                                               2009      Total $      Cash Flow

   Maryland Rail Commuter (MARC) Growth and Investment
   Plan                                                                 $25,850   $201,325      Ongoing
   Light Rail Vehicle Mid-life Overhaul – design and
   Construction of a mid-life overhaul of the Light Rail Fleet           11,348      60,014         2013
   Bus Kirk Division – replace existing facility with modern
   facility on expanded site                                              3,792      68,597         2012
   CAD/AVL Systems – computer aided dispatch and automated
   vehicle location project provides radio data channel expansion         1,500      12,083         2010
   Community Cable Television Improvements – provide system
   improvements to enhance safety and security                            4,100      22,801         2012
   Southern    Maryland    Commuter      Bus     Initiative –
   Construction of commuter bus park and ride lots                        2,626      41,710         2013
   Total                                                                $49,216   $406,530


MTA: Maryland Transit Administration
CTP: Consolidated Transportation Program
CAD/AVL: Computer Aided Dispatch and Automatic Vehicle Location

Projects in bold indicate projects added as a result of the revenue increase.

Source: Maryland Department of Transportation, 2008-2013 Consolidated Transportation Program




Projects Added to the Development and Evaluation (D&E) Program
       One project, an assessment of transit needs for the Base Realignment and Closure (BRAC),
was added to the D&E program as shown in Exhibit 14.




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                              J00H01 – MDOT – Maryland Transit Administration



                                                  Exhibit 14
       Maryland Transit Administration Projects Added to the D&E Program
                                                  Fiscal 2009
                                              ($ in Thousands)

                                                                                       Completion of
                                                                                        Fiscal Year
         Project                                                   2009    Total $      Cash Flow

          Assessment of transit needs for
          Maryland Base Realignment and Closure                     $500    $9,000         2011


Source: Maryland Department of Transportation, 2008-2013 Consolidated Transportation Program



        As shown in Exhibit 15, five projects were delayed for a variety of reasons.


                                                  Exhibit 15
                   Maryland Transit Administration CTP Project Delays

  Project                                                        Reason                        Delay

  MARC Maintenance, Layover, and Storage             Construction delayed from          Fiscal 2009 to 2010
  Facility                                           fiscal 2009 to 2010 due to
                                                     design changes and railroad
                                                     negotiations
  MARC Edgewood Station                              Construction delayed due to        Fiscal 2008 to 2011
                                                     redesign requirements
  MARC Halethorpe Station Improvements               Construction delayed due to        Fiscal 2008 to 2009
                                                     Amtrak review and approval
                                                     of phase II.
  Red Line Corridor Transit Study                    Alignment options are under        Fiscal 2010 to 2013
                                                     evaluation
  Takoma/Langley Park Transit Center                 Right-of-Way negotiations are      Fiscal 2008 to 2010
                                                     ongoing


CTP: Consolidated Transportation Program

Source: Maryland Department of Transportation, 2008-2013 Consolidated Transportation Program




                      Analysis of the FY 2009 Maryland Executive Budget, 2008
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Issues
1.     Farebox Recovery Legislation

       Introduction
        Narrative in the 2007 Joint Chairmen’s Report (JCR) requested that MTA submit a report that
looked at the farebox recovery requirement, why it has not been met, what measures other transit
agencies use, and options for alternative cost control measures that may better measure the operating
efficiency of MTA. House Bill 1185 of 2008, a departmental bill, has been introduced to eliminate
the statutory farebox recovery requirement for Baltimore core services and MARC and instead
introduce three new performance measures that would be reported each fiscal year.

       Current Statutory Requirements
       Section 7-208 of the Transportation Article requires MTA to obtain a 50% minimum farebox
recovery for Baltimore area transit services (core bus, Baltimore Commuter Bus, light rail, and
Metro). Chapter 210 of 2000 lowered the required annual farebox recovery ratio from 50% to 40%,
with a sunset at the end of fiscal 2004. Chapter 447 of 2004 extended the sunset to June 30, 2008,
and held the requirement at 40%. Beginning July 1, 2008, the minimum farebox recovery for
Baltimore area services will again be 50%, absent further statutory changes.

      Section 7-902 of the Transportation Article requires MTA to maintain a separate 50%
minimum farebox recovery ratio for MARC services.

        Exhibit 16 provides a historical summary of what the actual farebox recovery has been as well
as current estimates for fiscal 2008 and 2009, accounting for fiscal 2008 deficiencies and service
enhancements in fiscal 2008 and 2009. As the exhibit shows, the farebox recovery ratio for Baltimore
area services is expected to be 30.8% in fiscal 2009; well below the 50.0% requirement. In addition,
MARC services for the first time since fiscal 1995 will not cover the 50.0% farebox requirement in
fiscal 2009 as a result of operating cost growth and service enhancements in fiscal 2008.

       What Is Farebox Recovery?
        Farebox recovery is a measure of operating revenues compared to operating expenditures. To
the extent expenditures are not covered by fares, the operating expense is paid from the
Transportation Trust Fund. Farebox revenue is driven both by the level of the fare assessed as well as
ridership. Ridership for light rail, metro and core bus increased on average 1.1% annually from
fiscal 2004 to 2009; however, this also includes the light rail double tracking project where ridership
dropped significantly. To the extent that ridership growth and corresponding fare revenue do not
keep pace with expenditure growth, the farebox recovery rate will decline. For example from
fiscal 2006 to 2009, average annual expenditure growth is 5.3% largely due to fuel and personnel
expenditures while operating revenue growth is expected to be 2.9%. Expenditure growth exceeding
operating revenue growth is the driving force behind the current declining farebox recovery rate.


                     Analysis of the FY 2009 Maryland Executive Budget, 2008
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                                J00H01 – MDOT – Maryland Transit Administration


                                                    Exhibit 16
               Maryland Transit Administration – Farebox Recovery History
                                  Baltimore Mass Transit Services and
                           Maryland Rail Commuter (MARC) Commuter Train
             Baltimore
  Fiscal       Core                                          Baltimore Core Service Modes Included
  Year       Services*        MARC (a)                   or Excluded from Farebox Recovery Calculation

      1984    48.5%             Not             All Bus and Metro included (b)
      1985    46.9%           Available         All Bus and Metro included
      1986    47.5%                             All Bus and Metro included
      1987    52.1%                             All Bus and Metro included
      1988    51.0%                             All Bus and Metro included
      1989    51.2%                             All Bus and Metro included
      1990    50.4%                             All Bus and Metro included
      1991    50.3%                             All Bus and Metro included
      1992    50.2%             50.7%           All Bus and Metro included, no Light Rail included (c)
      1993    50.6%             44.3%           All Bus and Metro included, no Light Rail included
      1994    50.2%             49.8%           All Bus and Metro included, no Light Rail included
      1995    51.6%             49.6%           All Bus and Metro included, no Light Rail included
      1996    47.4%             54.5%           Includes all Bus, Metro, and Light Rail
      1997    48.3%             50.5%           Includes all Bus, Metro, and Light Rail
      1998    46.0%             55.7%           Excludes Light Rail that opened December 1997 (c)
      1999    46.4%             56.3%           Excludes Light Rail that opened December 1997
      2000    42.3%             65.7%           Excludes Governor’s Transportation Initiatives (d)
      2001    40.2% (e)         58.1%           Excludes Governor’s Transportation Initiatives
      2002    37.3%             56.6%           Excludes Governor’s Transportation Initiatives
      2003    32.7%             54.7%           Excludes Governor’s Transportation Initiatives for first 36 months
      2004    39.9%             57.7%           Excludes Governor’s Transportation Initiatives for first 36 months
      2005    33.7%             59.4%           Excludes Governor’s Transportation Initiatives for first 36 months
      2006    33.2%             58.9%           Excludes Hamburg Street Station on Light Rail (f)
      2007    31.7%             56.2%           Excludes Hamburg Street Station on Light Rail
      2008    31.7%             50.1%           Excludes Hamburg Street Station on Light Rail
      2009    30.8%             42.5%

* Bold numbers indicate change in farebox recovery rate to 40%.
(a)
   The Statute governing MARC Farebox Recovery, Section 7-902, does not allow exclusion of costs and revenues for new
services during a start-up period. The farebox recovery requirement is 50%.
(b)
  Metro – the first segment opened November 21, 1983. Additional segments were opened July 20, 1987, and May 30, 1995.
All segments appear to have been included in farebox recovery calculation starting on the first day of service.
(c)
 Light Rail – the first segment opened May 17, 1992. Additional segments were opened August 30, 1992, April 2, 1993,
May 20, 1993, and December 6, 1997.


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                                   J00H01 – MDOT – Maryland Transit Administration
(d)
   The Governor’s Transportation Initiative (GTI) provided these and other new services that were excluded during their first 36
months of operations: The Hampden Shuttle Bus, Mondawmin Shuttle Bus, restoration of Sunday Metro service that had been
discontinued in the early 1990s, expanded Contract Commuter Service from Harford and Howard counties to Baltimore, major
service improvements on the Core Bus 8 Line, and major improvements in the Customer Information Center. For the farebox
recovery calculation, the starting date was noted for each initiative, with revenues and costs excluded for the first 36 months of
each initiative.
(e)
   The 50% farebox recovery was reduced to 40% in Chapter 210 of 2000 with a sunset in fiscal 2004 which was later extended
to June 30, 2008, in Chapter 447 of 2004.
(f)
  A dedication ceremony opening Hamburg Street Station for full-time revenue service was held on July 1, 2005. Previously,
the station was open only for Special Events such as Ravens Football Games. Estimated revenues and costs for regular revenue
service are excluded for fiscal 2006 through 2008.

Source: Maryland Transit Administration; Department of Legislative Services


        Exhibit 17 provides detail on each of the transit services provided that are calculated as part
of the Baltimore City farebox requirement and further illustrates the impact of expenditures and
ridership as discussed previously on farebox recovery on each type of transit. As the table shows,
Baltimore City core and commuter bus are estimated to have a farebox recovery rate of
approximately 35.0% in fiscal 2008 and 2009, down from the fiscal 2004 actual level of 45.8%.
Light rail is beginning to see its farebox recovery rate increase since the double tracking project was
completed and is estimated to be 22.0% in fiscal 2009. Metro decreases from 34.5% in fiscal 2004 to
an estimated 26.0% in fiscal 2009 as costs have increased and ridership growth has remained
relatively small.


                                                          Exhibit 17
                       MTA Farebox Recovery for Baltimore Area Services
                                                     Fiscal 2004-2009
                                                  2004        2005       2006        2007          2008            2009
                                                 Actual      Actual     Actual      Actual       Estimated       Estimated
  Baltimore Area Services                        39.9%       33.7%       33.2%       31.7%         31.7%            30.8%
    Baltimore Core/Commuter Bus                  45.8%       37.2%       37.2%       35.0%         35.0%            35.0%
    Metro                                        34.5%       33.2%       30.6%       28.0%         27.0%            26.0%
    Light Rail                                   19.0%       15.4%       16.0%       19.0%         20.0%            22.0%

Source: Maryland Transit Administration


       To increase the farebox recovery ratio MTA could cut costs or raise fares, which was last
done in fiscal 2004. MTA hired a consultant who looked at other transit agencies and found costs
were reduced primarily by reducing the amount of service provided and/or the supporting
maintenance for that service. To meet the 50% farebox recovery requirement an operating cost
reduction of $108 million would need to be made based upon the current level of revenues, which
represents a 39% reduction of total costs for Baltimore services.



                          Analysis of the FY 2009 Maryland Executive Budget, 2008
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                            J00H01 – MDOT – Maryland Transit Administration

        To meet the farebox recovery solely through a fare increase means that based upon MTA’s
estimate, the fare would increase from $1.60 to approximately $2.97 which would be the second
highest fare of the top 30 transit systems which translates into an additional $54 million based upon
the current level of expenditures. As with any fare increase, an important consideration is what
impact a fare increase could have on ridership. A significant increase in fares may only worsen
ridership and thus the farebox recovery ratio.

        An important note raised in the MTA report was that a number of riders currently ride for free
or for a discounted rate. For example, middle school and high school students in Baltimore City,
senior citizens, and disabled citizens pay a reduced fare. Another example is that State employees
ride for free. MTA estimates that if the full fare was paid, the farebox recovery rate would actually
be closer to 39% (this was prior to the additional spending provided for in the fiscal 2009 allowance).

       Other Efficiency Measures and House Bill 1185
        House Bill 1185 would eliminate the farebox recovery requirement and instead require a
report each fiscal year that looks at three performance measures focused on operational efficiency for
each type of transit service. MTA would manage its operations against the following three measures:

•      Passenger Trips Per Revenue Vehicle Mile: This would measure the number of trips
       provided by MTA compared to the number of revenue miles such that as ridership increases
       the number in the measure would increase. A positive trend would be for the measure to
       increase as a reflection of ridership. If additional trips or vehicle miles are provided, ridership
       numbers should also increase otherwise the additional trip may not be a productive addition.

•      Operating Expenses Per Revenue Vehicle Mile: This measure looks at operating
       expenditures in the context of the service provided, or how much does it cost to travel a mile
       on a trip. This number will likely increase due to personnel expenses. A lower cost per
       revenue vehicle mile means greater operating efficiency.

•      Operating Expenses Per Passenger Trip: This measure is similar to the operating expenses
       per revenue vehicle mile; however, the measure compares ridership to operating expenses.
       Once again, the general idea is to measure operating efficiency in terms of how much does it
       cost to provide one ride.

        Exhibit 18 provides a summary of each measure by mode of transit for fiscal 2006 through
2009. For core bus service, operating expenditures increased due to fuel and personnel, and as a
result, expenditures increases in each fiscal year and is reflected in the two operating expenditure
measures. This increase in expenditures was slightly offset by ridership growth from fiscal 2006 to
2007. For light rail, similar operating budget increases occurred; however, revenue vehicle miles
increased dramatically due to the completion of the double tracking project. MARC expenditures
have increased due to contract expenses, and as a result, operating cost per revenue mile and
passenger trip have been increasing.



                     Analysis of the FY 2009 Maryland Executive Budget, 2008
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                               J00H01 – MDOT – Maryland Transit Administration



                                                Exhibit 18
                                 Proposed Performance Measures
                                             Fiscal 2006-2009

                                                   2006        2007           2008          2009
                                                  Actual     Estimated      Estimated     Estimated

 Passengers Per Revenue Vehicle Mile
 Core Bus                                            3.9           4.0              4.0       3.9
 Metro                                               2.8           2.8              2.5       2.5
 Light Rail                                          2.9           2.4              2.5       2.7
 Mobility and Taxi Access                            0.1           0.1              0.1       0.1
 MARC                                                1.4           1.5              1.5       1.5
 Contracted Commuter Bus                             0.8           0.8              0.8       0.8
 Weighted Average                                    2.4           2.3              2.2       2.1

 Operating Expenses Per Passenger Trip
 Core Bus                                          $2.64         $2.76            $2.80     $2.86
 Metro                                              3.30          3.84             4.00      4.10
 Light Rail                                         6.07          5.90             5.72      5.62
 Mobility and Taxi Access                          40.31         39.29            38.12     39.71
 MARC                                              10.00         10.25            11.33     13.21
 Contracted Commuter Bus                           10.10         10.33            11.51     12.40
 Weighted Average                                  $4.00         $4.26            $4.48     $4.77

 Operating Expenses Per Revenue Vehicle Mile
 Core Bus                                         $10.31        $11.04           $11.23    $11.08
 Metro                                              9.09         10.68            10.15     10.15
 Light Rail                                        17.50         14.21            14.43     14.93
 Mobility and Taxi Access                           4.69          4.59             4.46      4.64
 MARC                                              14.47         15.39            17.02     19.72
 Contracted Commuter Bus                            7.58          8.25             9.21      9.96
 Weighted Average                                  $9.58         $9.94           $10.00    $10.27

Source: Maryland Transit Administration




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       Issues
        There are several issues associated with farebox recovery as well as the proposed legislation
for the committees to consider.

        How Should Transit Services and Budgets Be Measured?: There are three questions for
policymakers to decide regarding how transit services and budgets should be measured. First, should
transit service be considered in the context of revenues and expenditures; service delivery and
efficiency; or some combination thereof? Currently, MTA is required by statute to meet the farebox
recovery requirement which means that service efficiency is not considered as a statutory
performance measure. Furthermore, to what extent are service additions or enhancements not
implemented because of the cost and the potential impact on the farebox requirement? The farebox
recovery requirement does help in understanding how much service is self-supporting versus being
subsidized.

        Second, should the performance measure or benchmark be adjusted each year? The current
farebox recovery measure is a static measure that is not adjusted year to year. The proposed
legislation would reevaluate the measures each year to reflect service demands or enhancements. The
current requirement does not allow for adjustments year to year because the measure is focused on the
relationship between revenues and expenditures rather than service.

       Finally, should the farebox recovery or other performance measures be defined in statute?

        Accountability: With the current farebox recovery ratio, which has not been met since fiscal
2002, there is no consequence for not meeting the requirement. The proposed legislation does not
have a consequence should the goals not be met. Clearly, the goals are public and known such that
public officials are measured against a standard; however, that has not resulted in an improved
farebox recovery rate, and it is not clear that it will result in improvement of the proposed efficiency
measures. Furthermore, to what extent does the legislature have a role in determining what an
appropriate level of performance or service delivery should be under the proposed legislation?
Currently, the legislature does have the ability to reduce MTA’s budget to meet the cost recovery
requirement. However, the magnitude of the shortfall in meeting the farebox level makes this
difficult.

       Fare Increases: The proposed measures remove the measure of revenue from the overall
evaluation of transit services. The farebox recovery provides insight as to what extent fares are
covering the cost of providing a service and have value as a budgetary tool. Clearly, the farebox
recovery rate for transit service will not reach 100%; however, a goal may be established and used as
a measure of when and to what extent to proceed with fare increases. The Washington Metropolitan
Area Transit Authority (WMATA) increased its fares in January 2008 due to expenditure growth
outpacing revenue growth. As part of the fare increase, WMATA indicated that in the future fare
increases would be considered on a biennial basis and linked to inflation. MTA could adopt a similar
model for its fares which could help maintain a higher farebox recovery in the long run.




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       DLS recommends that MTA discuss the following with the committees:

•      the current status of the farebox recovery calculation and why MTA has been unable to
       meet the statutory requirement;

•      the proposed legislation and proposed measures preferred instead of a farebox recovery
       level;

•      how the department may be held accountable for not meeting the farebox recovery or
       other performance measures; and

•      to what extent MTA is evaluating fare increases and how they may help MTA meet the
       farebox recovery.


2.     Four Major Transit Projects All Competing for Funding
       The 2008-2013 CTP includes four major transit projects:

•      Baltimore Red Line – An east-west rapid transit system from Social Security to the Fells
       Point/Patterson Park area in Baltimore to address traffic congestion and support new and
       future transit-oriented economic development and revitalization. Bus rapid transit, light rail,
       bus enhancements, and “no build” options are all currently being considered.

•      I-270 Corridor Cities Transitway – Either a bus rapid transit system or light rail system to
       help relieve congestion from Shady Grove to I-70. Highway improvements to I-270 are also
       being considered.

•      Purple Line – A transitway between New Carrollton and Bethesda Metrorail stations.
       Currently, heavy rail, light rail, bus rapid transit, and “no build” are all options being
       considered.

•      Baltimore Green Line – The study will evaluate several potential alignments and alternatives
       for a service extension from The Johns Hopkins Medical campus to Morgan State University
       or Good Samaritan Hospital.

        Exhibit 19 provides a summary of the six-year funding total for each of the transit projects in
the fiscal 2008 to 2013 CTP. As a result of the revenue increase, the Green Line received an
additional $5.0 million, the Corridor Cities Transitway received $42.5 million, and the Purple Line
received $74.0 million for a total of $121.5 million in additional spending. In total, the four projects
are estimated to cost $373.0 million over the six-year period, which accounts for almost 16% of the
six-year total for capital spending in MTA. The funding shown only represents a fraction of the
funding necessary to complete each transit line. Each transit line, depending on the alignment and
type of service, will cost at least $1 billion.


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                                                  Exhibit 19
                               Project Cost of Major Transit Lines
                                              Fiscal 2008-2013
                                              ($ in Thousands)

 Project                          2008       2009      2010       2011       2012        2013     Total

 Red Line                        $4,297 $3,500 $9,000 $44,000 $65,500 $90,914                   $217,211
 Purple Line                      5,063   4,000   4,635 18,000    30,000   26,000                 87,698
 Green Line                       1,000   2,200   4,011   3,340    3,397    3,000                 16,948
 Corridor Cities Transitway         500   1,000   2,500 15,000    17,936   14,000                 50,936
 Total                          $10,860 $10,700 $20,146 $80,340 $116,833 $133,914               $372,793


Source: Maryland Department of Transportation, 2008-2013 Consolidated Transportation Program



        By fiscal 2013, the total committed to these four transit lines will be $134 million and account
for approximately 38% of the total MTA capital program in that fiscal year. However, in each of the
project information sheets, out-year funding for the transit lines is “contingent upon successfully
securing a Full Funding Grant Agreement with the Federal Transit Administration.” This means that
the funding for these projects may never be used or needed.

        Prospect of Federal Funding
        Virginia’s experience with the Dulles Rail extension highlights the importance and difficulty
in obtaining federal funding for large transit projects. Large transit projects are funded out of the
New Starts program where projects are evaluated on their cost-effectiveness and need. Due to
concerns regarding cost-effectiveness and operational concerns, it appears that federal funding for the
Dulles Rail extension is in jeopardy, thus endangering the entire project. In addition, funding from
the New Start program is highly competitive, meaning that the State will need to compete against
other projects for federal funding. The President’s federal fiscal 2009 budget request included
$1.3 billion for existing funding agreements for 15 projects and 2 new projects.

        MTA anticipates that a locally preferred alternative will be selected for the Red Line in winter
2008/2009 with a New Starts submission to the Federal Transit Administration in spring 2009. The
Corridor Cities Transitway is anticipated to have a locally preferred alternative in late summer 2008
with a New Starts submission in early 2009. For the Purple Line, MTA indicates that the selection of
a locally preferred option could occur in summer/fall 2008.

        Regardless of the funding program, the demand and competition for federal funds is such that
the prospect of the State receiving federal funding for four transit projects is remote. In addition, as
these projects must compete for federal funding, they must compete for limited transit funding against
every State. Furthermore, given that the total cost for just one line will exceed $1 billion, the State

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would need to find the funds to build the line. MTA will need to decide which projects to construct
or not to construct or determine other methods for paying for these capital projects.

        DLS recommends that MTA comment on the prospect of all four projects receiving
federal funding and how the State would pay for all four projects given diminishing federal
funds and broader State needs. DLS also recommends that MTA should discuss the practical
justification for committing over $133 million of its capital program in 2013, or 38%, of the
program in that year, to projects that, by its own admission, are unlikely to move to
construction without federal funding.


3.     MARC Growth and Investment Plan
       Currently, MARC service in Maryland is provided on three lines:

       Penn Line: Owned and operated by Amtrak, which runs from Perryville to Penn Station in
Baltimore and Union Station in Washington, DC. Currently, the average ridership is 19,000 daily
passenger trips.

     Camden Line: Owned and operated by CSX, which runs from Baltimore to Washington,
DC. Currently, the average ridership is 4,500 daily passenger trips.

      Brunswick Line: Owned and operated by CSX, which runs from Brunswick/Frederick to
Washington, DC. Currently, the average ridership is 7,000 daily passenger trips.

        Overall ridership has exceeded 30,000 daily trips with annual growth at close to 6% while
current ridership capacity is approximately 27,000. Ridership for MARC service is not expected to
diminish in the coming years due to the influx of jobs and population from BRAC, the cost of
gasoline, and ongoing congestion problems.

       Currently, the MARC system is at capacity and, as a result, future growth in the system will
be constrained. Expanding the service is difficult given that the State does not own the rail lines that
MARC trains traverse. MARC service operates within the freight schedules of CSX and Amtrak,
meaning in some cases MARC service is preempted. Without a dedicated line in each direction for
MARC service, expanding MARC service will be constrained and continue to require negotiation
with CSX and Amtrak.

       Proposed Investment Plan
        In September 2007, MTA released the MARC Growth and Investment Plan, which is a
long-term plan (through 2035) for how to enhance and grow the MARC system. The plan expands
MARC service for each of the three lines: Camden, Penn, and Brunswick. The total plan is
estimated to cost $3.9 billion in capital costs and $92.0 million in additional operating costs by 2035
and add 103,000 additional daily seats, as shown in Exhibit 20. A majority of the investments are
made on the Penn Line which accounts for 76% of the capital investment and 58% of the additional
daily seating capacity.

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                                               Exhibit 20
                             MARC Growth and Investment Plan
                                  Cost and Ridership through 2035
                                           ($ in Millions)

                                    Capital       Incremental        Total     Seating
                                     Cost        Operating Cost      Cost      Capacity

            Penn Line               $2,962                $61        $3,023       60,000
            Camden Line                409                 13           422       17,000
            Brunswick                  531                 18           549       26,000
            Total                   $3,902                $92        $3,994      103,000


Source: MARC Growth and Investment Plan, September 2007



       By 2035, the result of the investment on each respective line will be the following:

        Penn Line: By 2035, the plan would allow the Penn Line to largely have a dedicated fourth
line for MARC service. MARC service would run through the District of Columbia and into Virginia
as well as through Elkton and Newark. On-time performance would be at 95%, and there would be
connectivity with the Baltimore region’s transit system as well as expanded parking areas and
increased service.

        Camden Line: By 2035, there would be increased service and reliability through lengthened
trains and additional runs. Service would be extended into Northern Virginia, similar to the Penn
Line. On-time performance would reach 95%.

      Brunswick: Service to Frederick and into Northern Virginia would be provided, and trains
would be lengthened. In addition, service would increase during peak and off peak times with
weekend service provided. On-time performance would reach 95%.

       As a result of the revenue increase, approximately $215 million was added to the fiscal 2008
to 2013 CTP for capital improvements. Furthermore, in December 2007, BPW approved an agenda
item to add one early evening and two late evening rides for MARC service on the Penn Line at an
estimated operating cost of $2.4 million in fiscal 2009.

       Issues
       There are several issues regarding the MARC Growth and Investment Plan.




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•   CSX and Amtrak Cooperation: Currently, CSX and Amtrak own the respective rail lines
    and provide track time for the MARC service. MARC service is provided around the freight
    and intercity passenger services of CSX and Amtrak, respectively. To add more MARC
    service requires the cooperation of CSX and Amtrak which ultimately would reduce the rail
    time for their core businesses. To the extent that intercity passenger trips and freight runs are
    increasing, as reflected in on-time performance for MARC, the ability to add more MARC
    service is questionable. For example, Amtrak is increasing its intercity passenger and freight
    services, which could reduce available track time for MARC.

•   Broader State Plan: Clearly, MARC service is popular, and there is a capacity issue for the
    service. However, it is not clear how this level of investment for MARC fits into a broader
    State transit or transportation plan. The proposed MARC plan appears to represent an
    unconstrained plan for increasing MARC service; however, does it make sense to move
    forward with such an ambitious plan until a broader understanding of where the State should
    invest its transit resources is developed?

•   Financing: Given the cost of the MARC Growth and Investment Plan and the funds
    committed to the four proposed transit lines, is it feasible for the State financially to move
    ahead with the MARC Growth and Investment Plan. For example, the four proposed transit
    lines and the MARC plan account for 44% of all transit funding in fiscal 2013. It is not clear
    how the State will be able to afford all of the proposed transit lines in addition to the MARC
    plan.

•   Dedicated Line: The current plan builds up to a largely dedicated line between Baltimore
    and Washington, DC over time rather than committing immediately to developing a dedicated
    line, at least between Baltimore and Washington, DC on the Penn Line. Given the constraints
    on the current rail lines due to Amtrak’s travel schedule and the CSX business of moving
    freight, it may be more economical to begin building a third line dedicated to MARC service
    immediately.

•   Rail Car Storage: Trains are stored overnight at Penn Station, and currently there is no
    additional room to add more trains should capacity be expanded. There is a midday storage
    facility in Washington, DC that already exceeds capacity. Without additional storage space
    for trains, there is limited capacity to increase the number of runs on the MARC system
    beyond what is currently provided. How MTA intends to move ahead with the capital
    investment to expand the system without first addressing this question is somewhat unclear.

•   Operating Expenditures: Enhancing service through capital investments also translates into
    ongoing operating costs which are estimated at an addition $91 million in 2035. More
    positions and more contract costs will be needed to support the additional lines and
    maintenance from an expanded MARC service. By statute, MARC has to recover 50% of its
    operating costs from its revenue, which means that at a minimum as operating costs increase,
    the TTF will need to subsidize approximately half of the additional operating cost.


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    DLS recommends that MTA discuss the following:

•   how MARC investments are prioritized against the other competing transit projects
    currently under evaluation;

•   what is the opinion of CSX and Amtrak regarding the plan and their willingness to
    provide more rail time for MARC service;

•   why an incremental approach was adopted for building a dedicated Penn Line; and

•   the current status of funding additional storage space, and how quickly the MARC plan
    can move forward without this facility.




               Analysis of the FY 2009 Maryland Executive Budget, 2008
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Operating Budget Recommended Actions

1.   Add the following language:

     It is the intent of the General Assembly that beginning in fiscal 2010 the Department of
     Budget and Management require each State agency to provide funding in subobject 0182 for
     State employees to ride transit in the State for free and that those funds shall be remitted to
     the Transportation Trust Fund.

     Explanation: Currently, State employees may ride transit for free. There is a subobject
     provided for in the State listing of subobjects for agencies to budget the cost of transit rides
     for State employees and for those funds to be remitted to the Transportation Trust Fund
     (TTF). State agencies are not accounting for this cost in their budgets, and as a result, the
     TTF is subsidizing the cost. This action will disperse the cost across all State agencies and
     funds while allowing State employees to continue with the benefit. The Department of
     Budget and Management as part of its fiscal 2010 budget instructions shall develop a
     methodology for allocating the cost.

2.   Add the following language:

     Provided that the Maryland Transit Administration (MTA) shall notify the budget committees
     of any changes in the delivery or cost of contracted transit services during fiscal 2009 that
     were not originally appropriated or considered as part of the allowance and result in the
     expansion or the enhancement of bus or rail service on new or existing lines or trips. Prior to
     a contract extension or enhancement being approved by the Board of Public Works (BPW),
     MTA shall provide the following information to the committees:

     (1)     what additional service will be provided;

     (2)     a justification for the need for additional service and why the service cannot be
             considered as part of the normal budget process; and

     (3)     an estimate as to what ridership for the new service will be, the operating and any
             capital costs associated with the additional service, and any other budgetary impacts
             associated with the additional service.

     The committees shall have 45 days to review and comment upon submission.

     Explanation: In December 2007, MTA submitted contract additions to existing Maryland
     Rail Commuter (MARC) contracts to provide additional service. These contracts had an
     operating budget impact, and the budget committees were not given the opportunity to
     comment prior to the contracts being approved by BPW. This language would require MTA
     to give the committees notification of service enhancements and expansions prior to approval
     by BPW. This language applies to MARC, Commuter Bus, and Mobility services.

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     Information Request              Author                           Due Date

     Request on service               MTA                              As needed
     enhancements and
     expansions

                                                                 Amount                 Position
                                                                Reduction              Reduction

3.   Reduce funds for additional vehicle and facility            $ 1,000,000 SF
     cleaning contracts. This additional funding will be
     used across all modes of transit to clean facilities and
     vehicles in response to increased ridership and
     service. In its Managing for Results submission, the
     Maryland Transit Administration has indicated that
     customer satisfaction for cleanliness of vehicles
     increased from fiscal 2006 to 2007. Furthermore,
     ridership growth is projected to be relatively
     moderate in the coming fiscal year. This reduction
     will provide funding equal to prior fiscal years where
     customer satisfaction for cleanliness increased.

4.   Adopt the following narrative:

     Maryland Transit Administration Union Pension and Other Post Employment Benefits:
     The committees request that the Maryland Transit Administration (MTA) submit a report to
     the committees regarding its union pension system and Other Post Employment Benefits
     (OPEB). The report should include the following information:

     (1)     background information regarding the funding and benefits provided under the union
             pension system including retiree health insurance;

     (2)     at what level the pension plan OPEB is funded in the most recent calculation;

     (3)     what the current OPEB obligation is;

     (4)     what actions or steps MTA plans to take to address this unfunded liability; and

     (5)     what impact the OPEB liability may have on the balance sheet of the Maryland
             Department of Transportation, the State, and the budget of MTA.

     Information Request              Authors                          Due Date

     Report on MTA OPEB               MTA                              September 15, 2008
     obligation                       MDOT

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5.   Add the following language to the special fund appropriation:

     , provided that the appropriation is reduced by $5,500,000 and 71 positions for the increased
     funding to expand Baltimore core bus service by 4.5 percent.

     Explanation: The Maryland Transit Administration has proposed to increase core bus
     service in Baltimore City by 4.5% which translates into $4.5 million and 71 positions. In
     addition, there is $1.0 million in consulting fees to assist in implementing the additional
     service. This language eliminates funding for the proposed expansion of core bus service.
     Currently, core bus service in Baltimore City is not expected to experience a significant
     increase in ridership in fiscal 2008 and 2009 even with the addition of this service. The
     Maryland Department of Planning also estimates that Baltimore City’s population is
     estimated to have annual growth of 0.3% from 2005 to 2010. When looking at other
     performance measures, the passengers per revenue vehicle mile, a measure of ridership
     compared to service, is expected to decline from fiscal 2008 to 2009 even with this service
     addition.

6.   Add the following language to the special fund appropriation:

     Further provided that the Maryland Transit Administration (MTA) shall submit to the budget
     committees a report on the new contract for Mobility paratransit service. The report shall
     include the following information:

     (1)     the length of the contract and cost in each fiscal year of the contract;

     (2)     the terms of the contract and in particular the obligations of the contractor and the
             State;

     (3)     general information regarding the contract and major changes from the existing
             contract; and

     (4)     any impacts on service as a result of the new contract.

     The report shall be due 45 days after the contract is approved by the Board of Public Works
     (BPW).

     Explanation: MTA is expected to agree to a new third party contract for the paratransit
     Mobility service. This language requires that MTA submit a report to the budget committees
     after BPW approval regarding the nature and cost of the contract.

     Information Request              Author                           Due Date

     Report on new Mobility           MTA                              45 days prior to BPW
     paratransit contract                                              consideration


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7.   Add the following language to the special fund appropriation:

     , provided that this appropriation is reduced by $1,347,018 and nine regular positions are
     abolished. It is the intent of the General Assembly that the Maryland Transit Administration
     shall not expand Sunday service of the Light Rail to the Baltimore/Washington International
     Thurgood Marshall Airport in fiscal 2009 or add nine new positions to the fiscal 2009
     appropriation.

     Explanation: The Maryland Transit Administration has proposed expanding the hours of
     operation for Sunday service of the light rail to accommodate the employees at the
     Baltimore/Washington International Thurgood Marshall Airport. Ridership for the light rail
     service has begun to increase; however, average ridership is at 22,000, and the farebox
     recovery for light rail is estimated to be 22% in fiscal 2009, including the new service. It is
     not clear that there will be a significant increase in ridership or an improvement in the farebox
     recovery to justify this expanded service. This reduction totals $1,347,018 and nine new
     positions.
8.   Add the following language to the special fund appropriation:

     , provided that the Maryland Transit Administration (MTA) shall submit a report to the
     budget committees regarding the third party contract for Maryland Rail Commuter (MARC)
     service. The report is due when the Request for Information is issued for Industry Review
     and 45 days after the agreement is approved by the Board of Public Works. The report shall
     include the following information:

     (1)     a summary of the terms and length of the contract agreement;

     (2)     the projected annual cost of the contract;

     (3)     the projected cost increases or savings associated with the contract compared to
             current contract costs; and

     (4)     the operating impacts associated with the third party contract.

     Explanation: MTA is moving to a third party contract to provide MARC service. It is not
     clear what the impacts of this new contract may be. This language would require a report to
     the budget committees prior to and after the consideration of the Board of Public Works
     (BPW) on the cost and operating impacts associated with the new agreement.

     Information Request              Author                           Due Date
     Report on third party contract MTA                                When Request for
                                                                       Information issued
                                                                       45 days prior to BPW
                                                                       consideration

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                                                                 Amount
                                                                Reduction

9.    Reduce funds for Commuter Bus service increase.              1,251,525 SF
      The Maryland Transit Administration (MTA) is
      increasing the number of trips from Southern
      Maryland to Washington, DC by 5%. This would be
      in addition to 15 trips being added in the spring of
      2008 and annualized in the fiscal 2009 allowance.
      While the Commuter Bus service has been growing,
      MTA should first implement the 15 spring trips and
      determine the need prior to providing an additional
      5% of service.

10.   Add the following language to the special fund appropriation:

      , provided that the appropriation is reduced by $11,689,890 with the reduction to be allocated
      by the Maryland Transit Administration among the various grant programs as was proposed
      in the allowance.

      Explanation: The fiscal 2009 allowance for grants to locally operated transit systems
      (LOTS) increases by 25.0%, or $14.1 million, compared to the fiscal 2008 working
      appropriation. The agency indicates that the funds will be used to help improve local transit
      systems and allow for better connections between locally operated transit systems and urban
      transportation options. The additional funding is available as a result of the revenue increase.
      This reduction will allow for growth in the LOTS program to grow at 4.27%, or $2,410,110.
      This level of growth is equal to the level of budget growth recommended for the State budget
      by the Spending Affordability Committee.

      Total Special Fund Reductions                              $ 2,251,525




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PAYGO Budget Recommended Actions

                                                                Amount
                                                               Reduction

1.   Reduce special funds in the capital program to more       $ 50,000,000 SF
     accurately reflect cash flow needs. The agency
     reduced the fiscal 2008 working appropriation by
     $140 million     compared      to     the   legislative
     appropriation to more accurately reflect cash flow
     needs for projects.      The fiscal 2009 allowance
     increases by $183 million compared to the working
     appropriation. Given the large number of projects
     added in fiscal 2009 and the agency’s past problems
     with estimating cash flow, this reduction provides a
     more accurate portrayal of capital spending. Should
     the agency require additional funding beyond the
     appropriation for the capital program, a budget
     amendment may be processed. The committees
     should also consider a corresponding reduction in the
     annual debt authorization level for the department.

     Total Special Fund Reductions                             $ 50,000,000




                   Analysis of the FY 2009 Maryland Executive Budget, 2008
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Updates
1.     Paratransit Cost Benefit Analysis
       Fiscal 2008 budget bill language restricted $100,000 contingent on the submission of a
cost/benefit and qualitative analysis of the paratransit program. The report was to include
information regarding the privatization of the reservation and scheduling function and to what extent
MTA would continue to provide direct service or to wholly contract the service. Following is a
summary of the report.

       Background
       The Mobility paratransit service is a federally mandated curb-to-curb shared ride service for
individuals with disabilities who are not able to ride fixed-route public transportation. The service is
provided within three-quarters of a mile from any fixed route service provided by MTA’s light rail,
Bus, or Metro service. Approximately 3,700 trips are provided each weekday with 65,000 rides each
month. The service is provided by MTA and two private contractors. The average cost per rider is
$58.38, which consists of a TTF subsidy of $56.53, and $1.85 fare paid by each rider.

        In the late 1990s, the service model was that MTA provided approximately 15% of the service
with a single contractor providing the balance. To better meet the demands for the service, MTA
decided that it would take over the responsibility of trip reservations, scheduling, and dispatch. The
private contractor would then take the information and revise runs to better mix with its existing
planned trips. A study of the service was also commissioned in the late 1990s in response to the
demand for the service, as well as to address operational and quality issues.

       Current Business Model
        The results of the study coupled with a lawsuit filed by the Maryland Disability Law Center in
2003 charging poor service led to the current service delivery model. Currently, there are two
contracted providers and MTA which provide the service. MTA is responsible for all scheduling and
reservation services. Overall, the cost of the service as measured by the cost per trip has been steadily
increasing since 2005 because of increased demand for the service as well as increases in fuel prices
and personnel expenses.

         The effect of the new business model has been that on-time performance has increased
significantly, which had been a major charge in the lawsuit. In addition, the centralization of
reservation and scheduling services has provided MTA with more control and, as a result, a greater
ability to improve the service. Also, the use of multiple providers allows MTA to create competition
for service, which may lead to cost efficiencies.




                     Analysis of the FY 2009 Maryland Executive Budget, 2008
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       MTA’s Operating of Scheduling Services
        Research literature provides a mixed review in terms of the benefits of an entirely contractor
provided service. Originally, research found that privately operated service was less expensive to
provide; however, recent research would seem to indicate the opposite. If scheduling services were
done by a private contractor who was also a provider, a new contract would need to be bid due to
potential issues of equity in terms of the number of trips. However, a private contractor may be better
placed to keep pace with technological innovations, which may help reduce costs in the long-run. A
final important note is that MTA is precluded from subcontracting the entire Mobility paratransit
service due to contracts with the unions which prohibits MTA from subcontracting work that could be
done by the union.

       MTA Direct Service
       As indicated above, the most significant impediment to fully contracting the service is the
contract agreement between the unions and MTA. MTA feels that it is in the best interest of riders
for MTA to continue operating a portion of the service to continue gaining institutional knowledge
and experience to help mitigate any potential service disruptions.

       Mobility Fleet
        MTA owns all of the 362 vehicles currently used by both MTA and the two contractors.
MTA indicates that State ownership of these vehicles is beneficial due to the fact that it provides a
greater level of control over the system, ensures continuity of service, and reduces ongoing operating
costs.




                     Analysis of the FY 2009 Maryland Executive Budget, 2008
                                               46
                              J00H01 – MDOT – Maryland Transit Administration

                                                                                        Appendix 1


Current and Prior Year Budgets

                                   Current and Prior Year Budgets
                                    Maryland Transit Administration
                                           ($ in Thousands)

                        General            Special        Federal          Reimb.
                         Fund               Fund           Fund             Fund       Total
      Fiscal 2007
Legislative
Appropriation                $0          $413,422        $53,352                $0   $466,774
Deficiency
Appropriation                  0           35,856               0                0     35,856
Budget
Amendments                     0             4,655              0                0      4,655
Reversions and
Cancellations                  0               -94         -1,275                0     -1,369
Actual
Expenditures                 $0          $453,839        $52,077                $0   $505,916

      Fiscal 2008
Legislative
Appropriation                $0          $458,682        $53,352                $0   $512,034


Cost Containment               0                 0              0                0         0
Budget
Amendments                     0               834              0                0       834
Working
Appropriation                $0          $459,516        $53,352                $0   $512,868

Note: Numbers may not sum to total due to rounding.




                      Analysis of the FY 2009 Maryland Executive Budget, 2008
                                                47
                            J00H01 – MDOT – Maryland Transit Administration

Fiscal 2007
       Fiscal 2007 actual expenditures for MTA totaled $506.0 million in fiscal 2007, approximately
$39.1 million more than the legislative appropriation of $466.8.

       Special funds increased by a net of $40.4 million, with deficiencies totaling $35.9 million and
budget amendments increasing a net of $4.7 million offset by cancellations totaling $94,000 special
fund deficiencies increased for the following purposes:

•      $12.2 million for recently negotiated union contracts that could not have been added due to
       the timing of negotiations;

•      $9.0 million for bus operations including funding for overtime for bus operators, additional
       commuter bus services, and contract increases to improve bus service in the Greater Baltimore
       Region;

•      8.6 million for fuel and utility expenses due to rising market rates;

•      4.2 million to support the Mobility paratransit program due to ridership increasing above
       estimates; and

•      1.8 million for facility maintenance including escalator and elevator repairs.

       Special fund budget amendments increased a net of $4.7 million with increases for the
following purposes:

•      $4.8 million for the Mobility paratransit service due to increased customer demand for both
       contracted and MTA provided service as well as court-related costs;

•      $900,000 for the MTA police which increased the numbers of hours worked for patrols and
       other crime prevention activities to provide greater security;

•      $670,000 to fund the cost-of-living adjustment (COLA) for State employees;

•      $370,000 for a new master lease contract for CSX stations; and

•      $240,000 for maintenance contracts to service new features on buses.

     Reductions of $2,417,217, offset the increased spending, based on overbudgeted funds for
commuter bus services and diesel fuel.




                    Analysis of the FY 2009 Maryland Executive Budget, 2008
                                              48
                         J00H01 – MDOT – Maryland Transit Administration

     Mandated Appropriations

•    Senior Rides Program: The fiscal 2007 appropriation for the program totaled $100,000, and
     the actual expenditure totaled $91,208.

•    Prince George’s Paratransit: The fiscal 2007 appropriation for the paratransit grant totaled
     $450,000, while the actual expenditure totaled $406,561.

•    Montgomery and Prince George’s Local Bus: The fiscal 2007 appropriation for these
     grants totaled $29.4 million. Fiscal 2007 actual expenditures totaled $28.0 million with
     special fund cancellations of $94,000 due to a timing issue with the accounting of federal
     funds. Federal fund cancellations totaled $1.3 million due to the funds being received too late
     in the fiscal year to be expended.


Fiscal 2008
     The special fund appropriation increased $834,000 to fund the COLA.




                  Analysis of the FY 2009 Maryland Executive Budget, 2008
                                            49
                                                                                                               Object/Fund Difference Report
                                                                                                            MDOT – Maryland Transit Administration

                                                                                                                                     FY08
                                                                                                                    FY07            Working           FY09           FY08-FY09        Percent
                                                                              Object/Fund                           Actual        Appropriation     Allowance       Amount Change     Change

                                                          Positions

                                                          01   Regular                                                  2900.50          2950.50         3061.50            111.00          3.8%
Analysis of the FY 2009 Maryland Executive Budget, 2008




                                                          02   Contractual                                                30.00            31.00           19.00            -12.00        -38.7%




                                                                                                                                                                                                                J00H01 – MDOT – Maryland Transit Administration
                                                          Total Positions                                               2930.50          2981.50         3080.50             99.00         3.3%

                                                          Objects

                                                          01   Salaries and Wages                                 $ 239,485,135     $ 237,633,181   $ 255,404,477      $ 17,771,296         7.5%
                                                          02   Technical and Spec. Fees                               1,629,811         1,312,872         911,278          -401,594       -30.6%
                                                          03   Communication                                          1,589,155         1,398,484       1,373,484           -25,000        -1.8%
                                                          04   Travel                                                   633,715           167,039         117,039           -50,000       -29.9%
                                                          06   Fuel and Utilities                                    13,569,488        13,319,032      13,563,773           244,741         1.8%
                                                          07   Motor Vehicles                                        46,954,968        50,106,142      53,218,604         3,112,462         6.2%
                          50




                                                          08   Contractual Services                                 132,626,717       139,687,255     182,339,981        42,652,726        30.5%
                                                          09   Supplies and Materials                                 6,692,173         4,676,867       4,750,367            73,500         1.6%
                                                          10   Equipment – Replacement                                  268,500           421,569         248,377          -173,192       -41.1%
                                                          11   Equipment – Additional                                   526,456           500,797         495,989            -4,808        -1.0%
                                                          12   Grants, Subsidies, and Contributions                  54,362,731        57,413,578      71,513,578        14,100,000        24.6%
                                                          13   Fixed Charges                                          7,567,798         6,232,105       7,918,984         1,686,879        27.1%
                                                          14   Land and Structures                                        9,752                 0               0                 0         0.0%

                                                          Total Objects                                           $ 505,916,399     $ 512,868,921   $ 591,855,931      $ 78,987,010       15.4%

                                                          Funds

                                                          03   Special Fund                                       $ 453,839,311     $ 459,516,690   $ 535,761,700      $ 76,245,010        16.6%
                                                          05   Federal Fund                                          52,077,088        53,352,231      56,094,231         2,742,000         5.1%

                                                          Total Funds                                             $ 505,916,399     $ 512,868,921   $ 591,855,931      $ 78,987,010       15.4%




                                                                                                                                                                                                   Appendix 2
                                                          Note: The fiscal 2008 appropriation does not include deficiencies.
                                                                                                                   Fiscal Summary
                                                                                                         MDOT – Maryland Transit Administration

                                                                                                                    FY07            FY08            FY09                          FY08-FY09
                                                                            Program/Unit                            Actual        Wrk Approp      Allowance        Change         % Change


                                                          01 Transit Administration                                $ 43,422,832    $ 43,320,867    $ 49,723,089     $ 6,402,222         14.8%
                                                          02 Bus Operations                                         233,698,193     229,313,673     258,790,665      29,476,992         12.9%
Analysis of the FY 2009 Maryland Executive Budget, 2008




                                                          04 Rail Operations                                        153,833,210     162,000,923     186,733,320      24,732,397         15.3%




                                                                                                                                                                                                             J00H01 – MDOT – Maryland Transit Administration
                                                          05 Facilities and Capital Equipment                       140,374,919     159,702,001     338,267,751    178,565,750         111.8%
                                                          06 Statewide Programs Operations                           74,962,164      78,233,458      96,608,857      18,375,399         23.5%
                                                          08 Major IT Development Projects                           11,335,682       8,124,000      12,565,000       4,441,000         54.7%

                                                          Total Expenditures                                      $ 657,627,000   $ 680,694,922   $ 942,688,682   $ 261,993,760        38.5%


                                                          Special Fund                                            $ 534,538,394   $ 539,363,691   $ 742,015,451   $ 202,651,760        37.6%
                                                          Federal Fund                                              123,040,106     141,331,231     200,673,231      59,342,000        42.0%

                                                          Total Appropriations                                    $ 657,578,500   $ 680,694,922   $ 942,688,682   $ 261,993,760        38.5%
                          51




                                                          Reimbursable Fund                                            $ 48,500             $0              $0              $0          0.0%

                                                          Total Funds                                             $ 657,627,000   $ 680,694,922   $ 942,688,682   $ 261,993,760        38.5%

                                                          Note: The fiscal 2008 appropriation does not include deficiencies.




                                                                                                                                                                                                Appendix 3
                                   J00H01 – Maryland Transit Administration

                                                                                              Appendix 4


                                  Budget Amendments for Fiscal 2008
                           Maryland Department of Transportation
                            Maryland Transit Administration – Operating

         Status                 Amendment                     Fund                  Justification

        Pending                    $834,239                  Special          This amendment funds
                                                                              the cost-of-living
                                                                              adjustment granted to all
                                                                              eligible State employees.


Source: Maryland Department of Transportation




                      Analysis of the FY 2009 Maryland Executive Budget, 2008
                                                52
                                   J00H01 – Maryland Transit Administration

                                                                                                   Appendix 5


                                  Budget Amendments for Fiscal 2008
                           Maryland Department of Transportation
                            Maryland Transit Administration – Capital

        Status               Amendment                    Fund                         Justification

       Pending                  $167,418                 Special              This amendment funds the
                                                                              cost of living adjustment
                                                                              granted to all eligible State
                                                                              employees.

       Projected            -$51,529,417                 Special              Adjusts the amended
                             -88,868,000                                      appropriation to agree with
                                                                              the anticipated expenditures
                           -$140,397,417
                                                                              for the current year as
                                                                              reflected in the final 2008 to
                                                                              2013 Consolidated
                                                                              Transportation Program.


Source: Maryland Department of Transportation




                      Analysis of the FY 2009 Maryland Executive Budget, 2008
                                                53

				
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